Lord Mackay of Drumadoon: My Lords, I am grateful, as always, to the noble and learned Lord. It will be one of the regrets of my legal career that I never had the opportunity of appearing against him in court, although, who knows, once devolution issues come thick and fast, we may yet meet.

Perhaps I may begin by responding to the point made by the noble Lord, Lord Thomas. I may be wrong but I do not understand that this Parliament will be a party in any legal proceedings in which devolution issues arise. The parties as far as concerns this part of the world will be the United Kingdom Government represented by one or other of the Law Officers. So I think the noble and learned Lord's point may not be, as we sometimes say in the courts, his best point.

The noble and learned Lord more than once stressed that this is a situation where the arguments require to be balanced, and that it is not clear-cut one way. I fully accept, taking one of the detailed points that was raised, that paragraph 32 of Schedule 8 says what it says. But it still seems to me that there is a concern about conflict and there is a concern about some of the wider issues on which I focused. For that reason, I seek to take the opinion of the House.

7.32 p.m.

Page 57, line 9, leave out ("Attorney General") and insert ("relevant law officer").

The noble and learned Lord said: My Lords, Amendments Nos. 172, 173 and 175 were originally proposed by the noble and learned Lord, Lord Mackay of Drumadoon, in Committee. They would allow each of the UK law officers potentially to be participants in proceedings about devolution issues. In bringing these amendments before your Lordships the Government are fulfilling the pledge that I gave to the noble and learned Lord during the Committee proceedings. At that time,

9 Jul 1998 : Column 1427

had our procedures permitted, the Government would have accepted the amendments. As it is, we bring them back, with thanks, now. I beg to move.

On Question, amendment agreed to.

Lord Falconer of Thoroton moved Amendment No. 173:

Page 57, line 11, leave out ("Attorney General") and insert ("relevant law officer").

On Question, amendment agreed to.

[Amendment No. 174 not moved.]

Lord Falconer of Thoroton moved Amendment No. 175.

Page 57, line 27, after ("In") insert ("this section "the relevant law officer" means--
(a) in relation to proceedings in England and Wales, the Attorney General,
(b) in relation to proceedings in Scotland, the Advocate General for Scotland, and
(c) in relation to proceedings in Northern Ireland, the Attorney General for Northern Ireland;
and in").

On Question, amendment agreed to.

Schedule 9 [Welsh Administration Ombudsman]:

Lord Falconer of Thoroton moved Amendments Nos. 176 to 178:

Page 102, line 18, leave out ("of the Assembly after the first") and insert ("after the first financial year of the Assembly")
Page 102, line 32, leave out ("of the Assembly")
Page 102, line 44, leave out ("of the Assembly")

On Question, amendments agreed to.

Baroness Ramsay of Cartvale: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, may I suggest that the Report stage begins again not before 8.35 p.m.

Moved accordingly, and, on Question, Motion agreed to.

Appropriation (No. 2) (Northern Ireland) Order 1998

The noble Lord said: My Lords, the draft order before us today authorises expenditure of £3,754 million for Northern Ireland departments in the current financial year. This is in addition to the sum of £3,026 million voted on account in March, and brings total estimates provision for Northern Ireland departments to £6,780 million, an increase of 6 per cent. on 1997-98. The order also authorises the use of additional receipts to meet an excess vote in 1996-97.

I would remind your Lordships that the order does not cover the estimates for the Northern Ireland Office on law and order services. As a Whitehall department,

9 Jul 1998 : Column 1428

the estimates for the Northern Ireland Office are dealt with separately. However, the public expenditure decisions underlying the estimates for the Northern Ireland departments and the Northern Ireland Office form part of the Northern Ireland block allocation. As such, the Secretary of State has flexibility to reallocate resources within the block in the light of emerging pressures and easements.

Before turning to the contents of the estimates I hope your Lordships will allow me to make a number of more general comments. I am sure that many of your Lordships would share with me the view that the present process of approving this order is not the most effective means of exploring and examining the Northern Ireland Estimates. However, since in the future it will fall to the new Northern Ireland assembly to deal with the estimates and expenditure currently falling to the six Northern Ireland departments--and this may, therefore, be the last occasion on which the order is brought before this House in this way--this would clearly not be the appropriate time to propose change.

I am sure your Lordships will join with me in recognising the possibilities for truly momentous change flowing from the establishment of the assembly and will share with me in the desire to do everything possible to ensure its success. Indeed, given the present difficult circumstances in the Province, I am sure your Lordships will agree that all those who can bring influence to bear in resolving the present situation should be encouraged to do so. Furthermore, I am sure that your Lordships will agree that the initial cost of the assembly at some £9 million is not a high price to pay compared to the cost and consequences of an absence of democracy. Surely we will all accept that locally elected representatives accessible to, and ultimately accountable to, the people of the Province, provide the best possible chance of a lasting solution to the tensions which remain so evident.

The effects of the present, but, hopefully, temporary disruption in the Province, undoubtedly impact on the prospects for economic development, including tourism. Many observers might see these as self-inflicted wounds. However, past achievements have shown that Northern Ireland can and will recover lost ground. For example, the latest available official statistics show that the Northern Ireland economy remains in good health in almost every area. The main economic indicators have, once again, shown very positive results for the Province.

The output of manufacturing and production industries continues to rise at a rate well above that achieved nationally. Over the past five years, Northern Ireland's manufacturing sector has increased its output by almost 24 per cent.--more than twice the rate of growth achieved nationally. There has also been a significant improvement in the Province's gross domestic product relative to the United Kingdom, with GDP per head rising from 78.2 per cent. of the national average in 1990 to 81.2 per cent. by 1996. Furthermore, record employment levels have also been achieved.

The year 1997-98 has also been a record year for investment in the Province, with planned investment by IDB client companies totalling £713 million, an increase of 12 per cent. on last year's figure. This investment

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represents the promotion of 7,137 new jobs while safeguarding a further 4,254 existing jobs. Forty-one inward investment projects contributed anticipated investment of over £520 million. This should create a record high 5,064 new jobs, while safeguarding a further 2,483 jobs.

All of this clearly demonstrates the impressive achievements of the Northern Ireland economy which, coupled with the potential for achieving political stability, provides Northern Ireland with an opportunity for a brighter economic future.

In Northern Ireland, as in the rest of the UK, education and health are government priorities. So far as concerns Northern Ireland, additional funding in these and other comparable national programmes is calculated by reference to the Barnett formula which in essence reflects the broad population balance between Northern Ireland and the rest of the UK. Budget additions to Northern Ireland public expenditure in 1998-1999 include £34 million for education, £44 million for health and £46 million for welfare-to-work. In addition, the Chancellor's package amounting to £315 million, announced on 12th May, provided funding for roads, education, housing and agriculture, including funding through the proposal to transfer the Port of Belfast to the private sector.

I now turn to the main items of expenditure covered by the order as detailed in the estimates booklet. The figures are generally rounded to the nearest million pounds and I shall be as brief as possible to allow maximum time for debate. I shall start with the Department of Agriculture. In Vote 1, net provision of £17 million is to fund EU and national agriculture support measures.

In Vote 2, £130 million is for on-going regional services and support measures. This includes £63 million for the development of the agriculture and agricultural products industries and for scientific and veterinary services. Some £23 million is for farm support, enhancement of the countryside, and fisheries and forestry services; £22 million is for central administration, including information technology and specialist accommodation services, and £7 million is for the rural development programme. Some £17 million is for the Rivers Agency and some £5 million is in respect of processing and marketing and fishing projects which are wholly funded by the European Union.

In the Department of Economic Development's Vote 1, £160 million is for the Industrial Development Board. As the shadow assembly begins to work towards implementing the Belfast Agreement supported by over 70 per cent. of the people of Northern Ireland in the referendum on 22nd May and re-affirmed in the assembly election at the end of June, the prospect of greater political stability provides a unique opportunity for attracting new investment to Northern Ireland. The IDB already offers a very competitive package of assistance to both new and existing firms and together with a more stable environment will further increase the attractiveness of the Province as a good place to do business. This major commitment of resources will enable the IDB to maintain a high level of support towards improving the Northern Ireland economy.

9 Jul 1998 : Column 1430

In Vote 2, £117 million is required. This includes £14 million for the Northern Ireland Tourist Board, to assist the development of tourism in Northern Ireland. In 1995, during the previous ceasefires, almost 1.6 million visitors came to Northern Ireland, an increase of 20 per cent. on the previous year. This aptly demonstrates the potential that exists for attracting tourists and increasing the contribution the tourist industry can make to the economy. At present, spending by holiday visitors and domestic holiday makers accounts for 2 per cent. of Northern Ireland's GDP, sustaining in the region of 12,500 jobs. I hope that at the present time, when Northern Ireland is going through what I believe is a short-term but difficult situation, people will reflect on the consequences of their present conduct on the potential for tourism and attracting inward investment.

In Vote 3, £210 million is sought for the Training and Employment Agency; £62 million is to fund 14,700 training places under the jobskills training programme. A total of £32 million is for the Action for Community Employment Scheme, Community Work Programme and Enterprise Ulster which will provide some 5,780 places for long-term unemployed adults in projects of community benefit. A further £23 million is to assist companies improve their competitiveness by developing the skills of their workforce. Almost £40 million under the Government's welfare-to-work initiative will provide a range of employment and training measures within the new deals for 18-24 year-olds and long-term unemployed.

The Chancellor's recently announced initiative will also provide an additional £42 million from November 1998 to assist the long-term unemployed, providing up to 30,000 places. Taken together with the welfare-to-work allocation, this is a substantial commitment by this Government to tackle the root causes of unemployment and provide new opportunities for work.

I now turn to the Department of the Environment, which in Vote 1, seeks £174 million for roads, transport and ports. This includes £138 million for the development and operation of Northern Ireland's public roads system as well as maintenance which continues to remain a priority.

Vote 2 relates to housing, where £267 million will be provided, mainly to the Northern Ireland Housing Executive and the voluntary housing movement. When net borrowing and the Housing Executive's rents and capital receipts from house sales are taken into account, the total resources available for housing will be approximately £603 million.

In Vote 3, gross expenditure of £194 million is estimated on the provision of water and sewerage services, of which £87 million is for capital expenditure and £104 million for operational and maintenance purposes, including administration costs.

In Vote 4, £190 million is being sought for environmental and other services provided by a number of agencies including the Environment and Heritage Service, Planning Service, Ordnance Survey of Northern Ireland and the Rate Collection Agency; £38 million is

9 Jul 1998 : Column 1431

for the important task of urban regeneration measures targeted at areas of social, economic and environmental need. This represents a net increase approaching £5 million more than last year and it is anticipated that these resources, through various partnerships with the private sector, will continue to produce higher overall investment levels; £30 million will be made available under the EU Peace and Reconciliation Programme of which £23 million will be funded from EU receipts.

The estimates for the Department of Education seek a net total of £1,403 million in Vote 1, an increase of 0.5 per cent. on last year's provision. When account is taken of Northern Ireland's share of receipts in each year from the national sale of the student loan debt, expenditure will increase by 3.2 per cent. Vote 1 includes £833 million for recurrent expenditure by education and library boards, of which £1 million is provided under the Government's new deal. This includes £792 million for schools, and £41 million for libraries, youth, administration and other services.

Vote 1 also provides £37 million for boards' capital projects; £50 million for capital projects in voluntary and grant-maintained integrated schools; and £151 million for recurrent expenditure in voluntary and grant-maintained integrated schools. These amounts include £41 million for grant-maintained integrated schools, an increase of £9 million over 1997-98. The provision for boards' and other schools' capital includes some £6 million under the Government's new deal.

Also in Vote 1, £95 million has been provided for colleges of further education, £112 million for local universities and £133 million for student support, including grants and student loans. The vote also covers expenditure on a range of youth, sport, community and cultural activities, including £16 million for arts and museums, and £4 million for community relations. Some £12 million has also been made available under the EU Peace and Reconciliation Programme, of which £9 million is being funded from EU receipts.

The next set of votes relate to the Department of Health and Social Services where £1,601 million is sought in Vote 1 for expenditure on hospital, community health and personal social services, health and social services trusts, family health services and certain other services. This amount represents an increase of 2.3 per cent. on last year's final net provision.

In Vote 3, £25 million is sought for expenditure on grants to voluntary bodies, research, training, bursaries and further education and certain other services.

In Vote 4, £142 million is sought to meet the department's administration and other miscellaneous costs. This includes £93 million for the Social Security Agency, which also takes into account £2 million in respect of administering the welfare-to-work initiatives; £8 million is for the Northern Ireland Child Support Agency; £4 million for the Health Estates Agency and £37 million for the core department.

In Vote 5, £1,766 million is sought for social security benefit expenditure administered by the Social Security Agency. This represents an increase of 8.6 per cent.

9 Jul 1998 : Column 1432

compared to forecast outturn for last year. It covers not only the general uprating of benefits from April 1998, but also an increasing number of beneficiaries.

In Vote 6 £348 million is sought to cover expenditure on the independent living funds, motability, housing benefits, the social fund and payments into the Northern Ireland National Insurance Fund.

Finally, I turn to the new Northern Ireland Assembly vote where £9 million is sought for set-up and operational costs. Pending parliamentary approval of the 1998-99 main estimates, arrangements have been made for resources to be advanced from the Northern Ireland Consolidated Fund.

I hope that this short summary of the main components of the estimates is helpful. I commend the order to your Lordships. I beg to move.

Moved, That the draft order laid before the House on 16th June be approved.--(Lord Dubs.)

7.51 p.m.

Lord Molyneaux of Killead: My Lords, it goes without saying that in the light of the Northern Ireland Assembly and the rather exotic base thereon there may be a considerable change to our debates on appropriation orders, if indeed they exist in their present form in future. Local representatives will in many ways, not yet clearly defined even by themselves, become responsible for the administration of the departments listed in the present order. But the Parliament of the United Kingdom will remain in control of the block grant, as will be the case in Wales. There is a certain parallel. In both cases the Treasury will remain the paymaster. It follows that financial accountability to Parliament must remain. It may not be in such detail but in principle there will have to be accountability.

Presumably, the estimates of the Northern Ireland Office will continue more or less in the same categories but under a form of direct control, if not direct rule. Therefore, the position will not resemble the arrangements that existed under the Government and Parliament of Northern Ireland up until 1972. It follows, I hope, that there will remain a Secretary of State for Northern Ireland with Cabinet rank, as in the case of Wales, as I understand it. Scotland may be in a different position even in advance of achieving independence. That is not my ideal but it may prove to be unstoppable.

I turn to Part II, Vote 1: Department of Agriculture. I should like to raise the plight of the pig industry in Northern Ireland. I am aware that the Minister yesterday met representatives of the Ulster Farmers Union. He will have been made aware of the serious difficulties. As I understand it, the first difficulty is the burden of cost arising from the disposal of offal and dead pigs. That cost is now attributed to the producer. It may appear to be a minor matter, but in an industry that is already in serious trouble and in a depressed state it becomes a large minus factor for the average pig farmer.

An additional burden is imposed by the 1991 legislation that requires the conversion of sow stall and tether systems. I understand that the phasing-in period ends on 1st January 1999. It has been put to me that, although the legislation was and is a requirement of the

9 Jul 1998 : Column 1433

European Union, other member states, including our nearest neighbour the Irish Republic, do not share the intention to enforce the conversion in their respective territories. My facts may not be entirely accurate and I should welcome any clarification that the Minister may be able to provide. In similar fashion, there appears to be no ban in the Irish Republic, and as I understand it in other European states, on the use of meat and bonemeal in pig feed. Northern Ireland pig producers do not advocate the use of such dangerous ingredients, but find it difficult to understand why competitors south of the frontier should be permitted to retain a feedstuff cost advantage. I trust that the noble Lord, having reflected upon the proposals put to him yesterday by the Ulster Farmers Union, can give the House some encouraging news this evening.

I turn to the Department of the Environment's Vote 3 dealing with water and related matters (as it is politely called). For several years I have pleaded with successive Ministers in various departments for co-operation and co-ordination between the key elements of the Department of the Environment in regard to housing development in general. The roads and planning sectors, which are now subject to agencies within the department, appear to take no account of the non-availability of water and sewerage facilities, which I understand are also under an agency. I offer as a typical example the village of Glenavy in my former constituency, which is about five miles from my home. The planning and roads agencies gave the go-ahead for new housing estates. The builders moved in and the houses were built and occupied before it was discovered that basic services were almost non-existent and certainly totally inadequate. For two or three years residents had the unedifying experience of mobile slurry tankers shuttling from house to house, all made worse by inevitable spillage. The point that I have raised about co-ordination is made more urgent by the creation of three agencies that cover the fields that I have outlined. For the same reason, I caution against rumoured plans to split up the Department of the Environment. That would tend to make for even less communication and certainly less co-operation.

With Glenavy still in mind, perhaps I may mention that just before the fourfold expansion of that village the primary school and Roman Catholic secondary school were closed and demolished on the grounds the respective authorities decided that the roll in one case was seven short of the 200 required to enable the school to remain in operation. That decision was taken because no one had informed the education authority--I do not refer specifically to the department--that school numbers would mushroom within two years. Now the children have to be bussed long distances to inadequate schools.

That leads me to my final point, which is also related to the Department of Education: Vote 1. One of the primary schools to which children are bussed is Ballycarrickmaddy. (In my notes I have spelt the name of the school in block letters. I shall furnish that information to whoever requires it later.) That primary school is well known to my noble friend Lord McConnell. It is a tiny Victorian building, surrounded

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by a sea of mud in wet weather. Around the building dotted in a sea of mud like satellites are numerous mobile classrooms. Noble Lords will recall that the Department for Education in Whitehall made a Statement to the House some months ago that funds were to be made available to remove and replace outside toilets in the whole of England and Wales. In that Statement a time limit was set for the achievement of the target. Has that scheme been extended to Northern Ireland? If so, how has it been put into effect in schools like Ballycarrickmaddy, which passed out of my care at the general election but for which I still have a great affection? That school has no covered connections between the satellite portakabins. If that has proved to be impossible given the architectural layout of the complex, I am afraid that the only alternative is a new school.

8 p.m.

Lord Cooke of Islandreagh: My Lords, the Minister suggested that this is not a satisfactory way of handling the order in this House. I agree with him most heartily, because it is a subject upon which there should be detailed questions and answers for each department. We have only an hour in which to complete the debate on this order. There is no time to go though each section of it. For that reason I shall concentrate on the economy, which influences almost everything in the Province.

The Minister gave pertinent figures for the growth in GDP and employment. He has saved me trouble in that respect. The achievement and the steady growth of the Northern Ireland economy and its manufacturing industry in recent years have been outstanding. For much of that, the noble Baroness, Lady Denton, deserves credit. As Minister responsible for the economy in the previous administration, she worked hard, and, what is more important, effectively for the development of the economy.

Looking ahead, I cannot agree with the rosy outlook described by the Minister because for a variety of reasons the immediate prospects are not all good. For instance, the textile and clothing industry is under severe pressure, due partly to the strength of sterling but also because modern machinery and methods are now being employed in the Far East where labour costs are but a fraction of those in Europe. Long-established textile firms are in real difficulty. I trust the IDB is doing all that it can to assist those firms which provide employment for a large number of people and have been stable, in some cases, over several generations.

The most serious threat to the economy of Northern Ireland relates to agriculture. The EU embargo on beef exports by the UK has affected Northern Ireland more than Great Britain because 55 per cent. of beef in Northern Ireland was exported, in contrast to about 10 per cent. or less in Great Britain. At last the embargo has been lifted in Northern Ireland due to the combined efforts of government and the industry, but unfortunately it will take time before exports can be developed to anything like the former level.

The agri-food industry in Northern Ireland is very important. It accounts for 10 per cent. of total civil employment and 8 per cent. of GDP and has sales of

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£2.28 billion, of which 53 per cent. is directed outside the Province. In 1997 total income from farming in Northern Ireland decreased by 38 per cent., due largely to the beef crisis, and it is estimated that agriculture output will decrease by a further £50 million in 1998. Already large numbers of small rural businesses are having to cut their workforce numbers. This is very serious because rural areas in Northern Ireland depend almost entirely on agriculture, and the stable social structure depends on it.

My noble friend Lord Molyneaux spoke about the pig industry where there is a crisis. He gave reasons for it. For example, for more than a year the net margin per pig on a birth-to-bacon basis is negative. It varies from a loss of about £2 to as high as £10 per pig. As a result, pig farmers are in serious debt, and there is no sign of how they can get out of it. I know that the Minister is well aware of the situation. I hope that he can give us some suggestions tonight as to how the industry might find its way back to profitability.

In agriculture generally there is money which should be made available to the farmers, many of whom are seriously in debt to banks and to suppliers. For instance, the revaluation of the UK's green pound rate should be paid out. It has already been paid out in all other EU countries. There are other compensation packages approved by the EU and paid out elsewhere. Will the Minister tell the House what action is proposed to make payment of the various grants and compensations which have put Northern Ireland farmers at a disadvantage, particularly compared with their neighbours in the Republic of Ireland? The general belief is that the Republic of Ireland is much more adept at obtaining EU grants and assistance than is the case in the UK. That does not seem to make good sense.

The recent package of financial assistance announced by the Chancellor of the Exchequer as a peace package has been widely welcomed. The roads scheme which will help the infrastructure is most urgently needed and I hope can be put in hand without delay because of the time taken--a long time in some cases--to obtain planning permissions. Traffic delays in the Westlink in Belfast have a very high cost attached to them and the improvement is long overdue. For instance, freight traffic to and from Belfast Harbour has been restricted for some years.

Industry in Northern Ireland generally has been handicapped and promises to be handicapped for many years to come by something quite unconnected with the value of sterling or lower labour costs elsewhere. The cost of electrical power to Northern Ireland industry is approximately 30 per cent. higher than in GB and domestic customers are similarly disadvantaged and to an even greater extent than our cross-Border neighbours. That disadvantage is expected to widen in the coming years and promises to continue until the year 2010 when the contracts with the generators can start to be renegotiated. The Director General of OFREG is well aware of the seriousness of those differences and has been working hard to reduce the differential. His responsibilities include transmission and distribution

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where his action has reduced charges to consumers, but the real problem lies in the high cost of generation, over which he has no control.

The cost of generation in Northern Ireland is 43 per cent. higher than Great Britain. That is a remarkable difference. A recent report by consultants retained by the regulator shows that generating costs in Northern Ireland do not need to be out of line with those elsewhere. The reason for it is the nature of the generating contracts offered by government in 1993. Those power procurement agreements offer a premium for making the power available, and at the time of signing it was not appreciated by government that prices would fall in Great Britain. A premium is offered for increased availability. By improved efficiency, the generating companies have increased availability and reduced the cost. The present Government were not responsible for those contracts, but they must surely appreciate the disadvantage suffered by industry in Northern Ireland which makes it even more difficult to attract new manufacturing industry to the Province.

At the present time the problem has been complicated by the need to plan for the EC directive on electricity trading which will become effective in February 1999. That requires 25 per cent. of the output in Northern Ireland to be opened to competition.

Consultants have been engaged to work out a system which will nominally comply with the EC Directive, and by complexity of arithmetic it may be possible to devise a system but administration costs will be high both to the generators and to consumers. Due to high fixed costs payable under the long-term power purchase agreements I do not see how any system can be devised which will produce overall savings. In fact the costs of administration may lead to some increase in prices, rather than a decrease.

It is generally believed that OFREG is now in discussion with the generators to see whether some reduction in availability payments can be negotiated, but this can only go a small way to reduce the present large differential of 43 per cent. Surely this is the time, when Government are working on the peace package, to become involved in discussions with OFREG and the generator and to work out ways in which all or part of the present contracts can be bought out. There is, after all, £40 million available which was ear-marked by the last administration which could be regarded as an appetizer. A genuine reduction in power costs would send out a very good signal to industry if included as part of the peace package and of course for domestic consumers it would be very, very welcome.

I wish to ask the Minister whether there is provision in the order for civilian victims of violence and for police who have suffered violence. The issue was highlighted by Sir Kenneth Bloomfield in his recent report. The provision is urgently needed.